oiler1930's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/233378/comments http://seekingalpha.com/article/113035-where-will-oil-end-2009?source=feed#comment-345862 345862 Sun, 04 Jan 2009 20:17:18 -0500 http://seekingalpha.com/article/113034-the-ghost-of-crude-oil-futures-part-2-2?source=feed#comment-345859 345859
The comment about fees for USO is germane, but there is no counterparty to devour your investment, only price action. buying now may be safer.]]> Sun, 04 Jan 2009 20:05:42 -0500
The comment about fees for USO is germane, but there is no counterparty to devour your investment, only price action. buying now may be safer.]]> http://seekingalpha.com/article/112376-the-ghost-of-crude-oil-futures-part-1-2?source=feed#comment-341000 341000
I operate a small lease that raises four millionths of our domestic input (0.0004%). My lifting costs run $25/bbl; the new offshore oil is expected to cost $50-75 per bbl. The analysis above that shows lower costs neglects these facts.]]> Mon, 29 Dec 2008 21:48:19 -0500
I operate a small lease that raises four millionths of our domestic input (0.0004%). My lifting costs run $25/bbl; the new offshore oil is expected to cost $50-75 per bbl. The analysis above that shows lower costs neglects these facts.]]> http://seekingalpha.com/article/103408-where-have-all-the-peak-oil-believers-gone?source=feed#comment-296784 296784
trucking uses a lot of distillate (Diesel) fuel; there are engines being developed that can use liquefied natural gas, allowing a 50% reduction in hauling cost for fuel. big brown (UPS) now routes their trucks to all right turns to cut fuel costs from waiting to make left turns.

my yankee ancestors were frugal, and some of their traits were passed on to me.

problems with green power have caused dislocations in dispatching energy supply from ephemeral sources, particularly when there is an inadequate transmission capability, such as the west texas wind farm that needs a beefed up grid from a much more widely spread out generating source.

we are in love with our freedom of motion, but we go to extremes in its exercise. by the way, how many remember the gas lines in the seventies? you could get fueled up at 5 AM if you had business in the country side that required travel, but commuters spent lots of time hoping to get to the station before they ran out.

when it comes to bubbles, it is instructive to read "Extraordinary Popular Delusions and the Madness of Crowds"
by makay; the term bubble was applied to the South Sea and the Missippi, among others, but also Mackay addressed social madnesses such as witch hunts.]]> Sun, 02 Nov 2008 22:51:05 -0500
trucking uses a lot of distillate (Diesel) fuel; there are engines being developed that can use liquefied natural gas, allowing a 50% reduction in hauling cost for fuel. big brown (UPS) now routes their trucks to all right turns to cut fuel costs from waiting to make left turns.

my yankee ancestors were frugal, and some of their traits were passed on to me.

problems with green power have caused dislocations in dispatching energy supply from ephemeral sources, particularly when there is an inadequate transmission capability, such as the west texas wind farm that needs a beefed up grid from a much more widely spread out generating source.

we are in love with our freedom of motion, but we go to extremes in its exercise. by the way, how many remember the gas lines in the seventies? you could get fueled up at 5 AM if you had business in the country side that required travel, but commuters spent lots of time hoping to get to the station before they ran out.

when it comes to bubbles, it is instructive to read "Extraordinary Popular Delusions and the Madness of Crowds"
by makay; the term bubble was applied to the South Sea and the Missippi, among others, but also Mackay addressed social madnesses such as witch hunts.]]> http://seekingalpha.com/article/103236-economic-anomalies-explained?source=feed#comment-294969 294969
congress has the power of the purse, but congress can respond to presidential requests.]]> Fri, 31 Oct 2008 08:55:17 -0400
congress has the power of the purse, but congress can respond to presidential requests.]]> http://seekingalpha.com/article/88337-how-elastic-is-the-world-s-oil-supply?source=feed#comment-219814 219814
As a corrolary, should prices drop the addition of cheaper inventory quantities lowers the average cost. With a twenty day nominal inventory, turnover is swift, and a larger inventory at a better comfort level is affordable.]]> Thu, 31 Jul 2008 23:05:16 -0400
As a corrolary, should prices drop the addition of cheaper inventory quantities lowers the average cost. With a twenty day nominal inventory, turnover is swift, and a larger inventory at a better comfort level is affordable.]]> http://seekingalpha.com/article/87769-the-volatility-of-natural-gas?source=feed#comment-219808 219808
My daily analysis is directed to the ratio of the prices of crude, heating oil, and gasoline to the price of natural gas for the three nearby contracts, but corrected to price the cost of the relative heat content of these fuels, the upshot is that natural gas is priced in a range of 47% to 53% of the fuels, prices. This ratio was reversed to about 129% during the panic. Looking only at the record highs, the liquids are about 120% of NG.

Natural gas heat is relatively cheaper because production costs are much lower, and so are gathering and transportation costs. Coal bed methane is now being produced, and is profitable despite somewhat higher extraction costs, including coproduced water.

NG is definitely a cleaner fuel, in part because it is mostly burned at atmospheric pressure. Internal combustion engines, reciprocating or turbine, operate at high enough temperatures that nitrogen oxides invariably are produced as co-products of the combustion. The NOx concentration is not high enough to cause direct toxic symptoms, but is a needed component for the production of ozone during daylight hours. Should our transportation fleets move to the use of NG as a fuel, air pollution will continue to be about what is now.

As an aside, T Boone Pickens hs been touting NG prices in parity with liquid fuels. This would imply a doubling of the price. Such an occurrence would impel a counterattack of increased NG production and distribution, so that demand would be brought to parity with supply, and prices revert to current levels.]]> Thu, 31 Jul 2008 22:32:08 -0400
My daily analysis is directed to the ratio of the prices of crude, heating oil, and gasoline to the price of natural gas for the three nearby contracts, but corrected to price the cost of the relative heat content of these fuels, the upshot is that natural gas is priced in a range of 47% to 53% of the fuels, prices. This ratio was reversed to about 129% during the panic. Looking only at the record highs, the liquids are about 120% of NG.

Natural gas heat is relatively cheaper because production costs are much lower, and so are gathering and transportation costs. Coal bed methane is now being produced, and is profitable despite somewhat higher extraction costs, including coproduced water.

NG is definitely a cleaner fuel, in part because it is mostly burned at atmospheric pressure. Internal combustion engines, reciprocating or turbine, operate at high enough temperatures that nitrogen oxides invariably are produced as co-products of the combustion. The NOx concentration is not high enough to cause direct toxic symptoms, but is a needed component for the production of ozone during daylight hours. Should our transportation fleets move to the use of NG as a fuel, air pollution will continue to be about what is now.

As an aside, T Boone Pickens hs been touting NG prices in parity with liquid fuels. This would imply a doubling of the price. Such an occurrence would impel a counterattack of increased NG production and distribution, so that demand would be brought to parity with supply, and prices revert to current levels.]]> http://seekingalpha.com/article/87234-the-benefits-of-shifting-to-cng-for-fuel?source=feed#comment-217991 217991
Lawyers have been a plague since the days of the hanging gardens of Babylon. Irrigation kept that empire going until the necessity of maintaining the canals ceased to be recognized.

The big difference between a steam powered turbine and an internal combustion engine arises from the heat required to boil water, about half the total heat supplied in the boilers. The result is extraction of about 25 to 30% of the thermal energy as motive power; an internal combustion energy delivers about 40% with gasoline to about 55-60% with diesel fuel. The waste heat in the latter goes out the exhaust pipe.

I use the Energy Information Agency of Dept of Energy to follow crude usage. Refinery inputs are 15 million barrels a day (BOD), of which two thirds are imported, with most of the imports from the closest producers. Of the 5 MBOD produced domestically, about 20% comes from offshore oil in the Gulf.

LNG is a blend of natural gas that can be liquefied at moderate pressure. It does not require a super stout vessel for containment. Domestic gas, supplied by natural gas utilities tapping into the pipeline streams, is predominantly methane with a few percent of ethane and propane; it can only be liquified at cryogenic temperatures, or it can be compressed and held in stout vessels. Anyone familiar with oxygen systems may be aware of the ability to store liquid oxygen in a cryogenic container at nominal temperature. There are efforts being made to ship liquified methane from gas wells to existng pipelines, in cryogenic trailers, built like the liquid oxygen, nitrogen and hydrogen tankers, as opposed to building new gathering pipelines to the nearest major pipeline.

Upshot here is that cryogenic storage of liquid methane may be a practical solution for fueling a fleet of natural gas driven vehicles. I might add that methane from coal, with basically no ethane or larger molecules, could also be tapped as a source for liquid methane.]]> Wed, 30 Jul 2008 00:17:31 -0400
Lawyers have been a plague since the days of the hanging gardens of Babylon. Irrigation kept that empire going until the necessity of maintaining the canals ceased to be recognized.

The big difference between a steam powered turbine and an internal combustion engine arises from the heat required to boil water, about half the total heat supplied in the boilers. The result is extraction of about 25 to 30% of the thermal energy as motive power; an internal combustion energy delivers about 40% with gasoline to about 55-60% with diesel fuel. The waste heat in the latter goes out the exhaust pipe.

I use the Energy Information Agency of Dept of Energy to follow crude usage. Refinery inputs are 15 million barrels a day (BOD), of which two thirds are imported, with most of the imports from the closest producers. Of the 5 MBOD produced domestically, about 20% comes from offshore oil in the Gulf.

LNG is a blend of natural gas that can be liquefied at moderate pressure. It does not require a super stout vessel for containment. Domestic gas, supplied by natural gas utilities tapping into the pipeline streams, is predominantly methane with a few percent of ethane and propane; it can only be liquified at cryogenic temperatures, or it can be compressed and held in stout vessels. Anyone familiar with oxygen systems may be aware of the ability to store liquid oxygen in a cryogenic container at nominal temperature. There are efforts being made to ship liquified methane from gas wells to existng pipelines, in cryogenic trailers, built like the liquid oxygen, nitrogen and hydrogen tankers, as opposed to building new gathering pipelines to the nearest major pipeline.

Upshot here is that cryogenic storage of liquid methane may be a practical solution for fueling a fleet of natural gas driven vehicles. I might add that methane from coal, with basically no ethane or larger molecules, could also be tapped as a source for liquid methane.]]> http://seekingalpha.com/article/87353-oil-prices-global-gdp-and-net-oil-exports?source=feed#comment-217081 217081
Desert Storm responding to the invasion of Kuwait and the current event in Iraq come to mind as economic wars, not to mention German occupation of Roumania and Japanese seizure of Indonesia, both for sources of oil]]> Tue, 29 Jul 2008 00:29:18 -0400
Desert Storm responding to the invasion of Kuwait and the current event in Iraq come to mind as economic wars, not to mention German occupation of Roumania and Japanese seizure of Indonesia, both for sources of oil]]> http://seekingalpha.com/article/87246-stagflation-and-peak-oil-how-related-are-they-part-ii?source=feed#comment-217077 217077
In addition to the two plays for oil, futures and equity ownership, there is a third, to buy your own leases or to invest with honest operators, who may still be in the majority. There are almost as many scams in the oil mining sector (it really is a mining activity) as there are in gold mining. I live in the Illinois basin, and raise 3/1,000,000ths of the daily refinery input nationally. It is a lot of fun when you learn the business; it has taken me 15+ years to get here.

I think that the housing uproar has a long way to go before prices, in real terms, rise. Suburbanization has made major commuters of most of us; in the 1930's, factory hands lived close to their work, and walked it both ways. In my time, I have car-pooled to work, and did not feel the need to be able to come and go as I pleased. When I rode a bus to work, I would wait in the morning and calculate the percentage of cars passing with more than one head showing; scores were one to three people.

Ownership of gold is attractive now, as it was in the 1920's; acquiring bullion is a nice idea, but about 1934, Americans were required to surrender all their gold, while for silver, that went out the same way around 1965. As compensation, we were allowed to own gold and silver as bullion or as coins.

What are the chances of confiscation again?

The thermodynamic comments were of interest. A variation on the three laws, 1) You can't win; 2) you can't break even; and 3) you can't get out of the game. When applied to wind and solar energy, both are ephemeral; solar weakens substantially at sunset, and weakens under dense cloud cover, requiring rechargeable batteries, while wind does not blow steadily. I have priced both sources, and currently cannot justify investing in either for the production of power at currently prevailing prices for electricity.]]> Tue, 29 Jul 2008 00:22:17 -0400
In addition to the two plays for oil, futures and equity ownership, there is a third, to buy your own leases or to invest with honest operators, who may still be in the majority. There are almost as many scams in the oil mining sector (it really is a mining activity) as there are in gold mining. I live in the Illinois basin, and raise 3/1,000,000ths of the daily refinery input nationally. It is a lot of fun when you learn the business; it has taken me 15+ years to get here.

I think that the housing uproar has a long way to go before prices, in real terms, rise. Suburbanization has made major commuters of most of us; in the 1930's, factory hands lived close to their work, and walked it both ways. In my time, I have car-pooled to work, and did not feel the need to be able to come and go as I pleased. When I rode a bus to work, I would wait in the morning and calculate the percentage of cars passing with more than one head showing; scores were one to three people.

Ownership of gold is attractive now, as it was in the 1920's; acquiring bullion is a nice idea, but about 1934, Americans were required to surrender all their gold, while for silver, that went out the same way around 1965. As compensation, we were allowed to own gold and silver as bullion or as coins.

What are the chances of confiscation again?

The thermodynamic comments were of interest. A variation on the three laws, 1) You can't win; 2) you can't break even; and 3) you can't get out of the game. When applied to wind and solar energy, both are ephemeral; solar weakens substantially at sunset, and weakens under dense cloud cover, requiring rechargeable batteries, while wind does not blow steadily. I have priced both sources, and currently cannot justify investing in either for the production of power at currently prevailing prices for electricity.]]> http://seekingalpha.com/article/87353-oil-prices-global-gdp-and-net-oil-exports?source=feed#comment-217048 217048
When some folks rant about Arab Oil being the villains, and others say Saudi oil is in fourth of fifth place, with Canada and Mexico being first and second, and Venezuela, Nigeria and Saudi Arabia trailing, the fundamental factor in obtaining imports, for buyers, is to keep transport costs down. Costs on the margin spread to the totality of worldwide production, adjusted for grade of crude, and are pretty much based on landed prices of crude that can be piped to Cushing Oklahoma for delivery against crude contracts. Domestic consumption in producing nations reduces availability for export.

Liquid fuels are ideal for transportation energy, since very little weight is needed to contain the fuel, compared to coal or natural gas. During WW II, German vehicles were fueled with gasified coal or wood in a furnace mounted in the back of the vehicle; our EPA would not permit such a substitute here.

The economics of health care constitute a minefield to discuss. Typical company plans cover the first $2,000,000 net over deductables for the lifetime of employed individuals; I would not care to experience that much misery. Readily available statistics on health care costs are difficult to navigate and I have not taken the time to study same. Adam Smith would be able to make a quantitative assessment of the value added by restoring an individual to good health for the balance of such a one's life; Smith was scornful of the nobility who kept large retinues of servants in totally non-productive status. Trade is necessary to provide what is needed where not domestically available; if trade overall is not reciprocated, some folk have to do without.

Apologies for the parabolic comments.]]> Mon, 28 Jul 2008 23:08:24 -0400
When some folks rant about Arab Oil being the villains, and others say Saudi oil is in fourth of fifth place, with Canada and Mexico being first and second, and Venezuela, Nigeria and Saudi Arabia trailing, the fundamental factor in obtaining imports, for buyers, is to keep transport costs down. Costs on the margin spread to the totality of worldwide production, adjusted for grade of crude, and are pretty much based on landed prices of crude that can be piped to Cushing Oklahoma for delivery against crude contracts. Domestic consumption in producing nations reduces availability for export.

Liquid fuels are ideal for transportation energy, since very little weight is needed to contain the fuel, compared to coal or natural gas. During WW II, German vehicles were fueled with gasified coal or wood in a furnace mounted in the back of the vehicle; our EPA would not permit such a substitute here.

The economics of health care constitute a minefield to discuss. Typical company plans cover the first $2,000,000 net over deductables for the lifetime of employed individuals; I would not care to experience that much misery. Readily available statistics on health care costs are difficult to navigate and I have not taken the time to study same. Adam Smith would be able to make a quantitative assessment of the value added by restoring an individual to good health for the balance of such a one's life; Smith was scornful of the nobility who kept large retinues of servants in totally non-productive status. Trade is necessary to provide what is needed where not domestically available; if trade overall is not reciprocated, some folk have to do without.

Apologies for the parabolic comments.]]> http://seekingalpha.com/article/87289-insiders-preparing-for-major-drop-in-oil-prices?source=feed#comment-216090 216090 a crude producer gets 15% of sales tax exempt for a depletion allowance, in recognition of the oil pool being finite and not getting reproduced in situ. A converter, ie refinery, is liable for full net profits from production. An independent refiner is at the mercy of the integrated producer who gets 15 % of his sales exempted for production, and full tax liability for as much of the downstream activity that he chooses to own and operate.

The independent producer gets the tail end of the market when prices tumble to his cost or less; the independent refiner gets just enough margin to barely break even. Both activities may use commodity contracts to hedge their activities by selling forward production at a price estimated to guarantee some sort of profit, and for the refiner, buying forward crude and selling gasoline and heating oil contracts to protect a spread.

Direct ownership of production, carefully cost monitored, can pay an oilman a decent income. Direct ownership of an independent refinery seems to lead to bankruptcy.

With all that said, I believe that Valero is also a producer as well as a refiner, and qualifies as an integrated entity. They are not part of the seven sisters, such as the Siamese twins Exxon Mobil was once two of same, but are still a substantial world producer.]]> Sun, 27 Jul 2008 22:10:14 -0400 a crude producer gets 15% of sales tax exempt for a depletion allowance, in recognition of the oil pool being finite and not getting reproduced in situ. A converter, ie refinery, is liable for full net profits from production. An independent refiner is at the mercy of the integrated producer who gets 15 % of his sales exempted for production, and full tax liability for as much of the downstream activity that he chooses to own and operate.

The independent producer gets the tail end of the market when prices tumble to his cost or less; the independent refiner gets just enough margin to barely break even. Both activities may use commodity contracts to hedge their activities by selling forward production at a price estimated to guarantee some sort of profit, and for the refiner, buying forward crude and selling gasoline and heating oil contracts to protect a spread.

Direct ownership of production, carefully cost monitored, can pay an oilman a decent income. Direct ownership of an independent refinery seems to lead to bankruptcy.

With all that said, I believe that Valero is also a producer as well as a refiner, and qualifies as an integrated entity. They are not part of the seven sisters, such as the Siamese twins Exxon Mobil was once two of same, but are still a substantial world producer.]]>